EUR/USD Forecast May 14-18 – Did the euro find a bottom?

EUR/USD fell to new 2018 lows but managed to bounce after the US Dollar suffered its own disappointing data. What’s next? GDP and inflation figures stand out. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.

German factory orders fell by 0.9% and added to the misery while the euro zone’s largest economy’s industrial output rose by 1%, better than expected. The data is not impressive, but at least not all in the red. In the US, inflation fell short of expectations with 2.1% on Core CPI and weighed heavily on the US Dollar. Fed Chair Powell and ECB President Draghi did not provide any news.

EUR/USD daily chart with support and resistance lines on it. Click to enlarge:

German GDP: Tuesday, 6:00. The euro-zone growth dropped to 0.4% q/q in Q1 against 0.6% in Q4 2017 but this did not include the largest country. Nevertheless, the prospects are for a fall from the 0.6% level also experienced in Germany to lower levels of growth as the underlying data disappointed. A growth rate of 0.4% is on the cards for Q1.

French Final CPI: Tuesday, 6:45. The second-largest economy in the euro-zone saw prices rising by 0.1% m/m in April according to the preliminary release. This number will likely be confirmed in the final read.

French Private Payrolls: Tuesday, 6:45. France saw a 0.4% rise in total employment in Q4 according to the final read. This preliminary publication for Q1 2018 is expected to show the same scale: 0.4%.

GDP: Tuesday, 9:00. The Flash GDP version for Q1 2018 is expected to confirm the initial read of 0.4% q/q growth. However, if the German number surprises, expectations will change for this read as well.

German ZEW Economic Sentiment: Tuesday, 9:00. The ZEW institution publishes an early read on business confidence. Back in April, the score plunged from positive to negative territory, standing at -8.2 and reflecting pessimism. The figure for May is expected to be similar: -8 points. The all-European number carries expectations for 2 points against 1.9 last time.

Industrial Production: Tuesday, 9:00. The figure for the whole euro-zone is published after the largest countries have published their own data. Nevertheless, surprises are quite common in this read. After a drop of 0.8% in February, a bounce worth 0.6% is predicted for March.

German Final CPI: Wednesday, 6:00. The initial read for the Consumer Price Index in Germany showed no change in prices month over month. The final read will likely confirm this.

CPI: Wednesday, 9:00. Euro-zone inflation decelerated in April according to the initial read: 1.2% on the headline and a weak 0.7% on the core CPI. The slowdown is partly attributed to the early Easter holiday. A confirmation of the data is expected now.

Mario Draghi talks Wednesday, 12:00. The President of the European Central Bank will honor his long-time Vice President Vitor Constancio in an event in Frankfurt. Draghi is scheduled to deliver opening remarks and may refrain from any monetary policy comments.

German inflation data: Friday, 6:00. Producer prices eventually feed into consumer prices. After a modest rise of 0.1% in March, Germany’s PPI is expected to rise by 0.3%. The Wholesale Price Index was flat in March and is forecast to rise by 0.2% this time.

Current Account: Friday, 8:00. Similar to the wide trade surplus, the euro-zone enjoys a broad current account surplus due to German exports to a great extent. The surplus stood at 35.1 billion in February and a similar figure is likely in March.

Trade Balance: Friday, 9:00. The trade balance surplus stood at 21 billion euros in February and we may see a slightly higher number as Germany’s trade balance widened in March.

* All times are GMT

EUR/USD Technical Analysis

Euro/dollar started the week with further drops, creating a double-bottom at the 1.1820 level (mentioned last week).

Technical lines from top to bottom:

1.2412 was swing high in mid-April and also in March. 1.2345 remains a pivotal line. Further below, 1.2270 was a swing low in mid-February and mid-March. The 1.2210 level which served as a cushion in April is the next level to watch.

1.2155 was a low point in early March and the last line before 1.2090, the 2017 peak. 1.2060 was the low point in late April and it is the last barrier before the round number of 1.20. Even lower, 1.1915 was a stepping stone on the way up for the pair.

Further down, the 1.1820 level was a stubborn support line in late 2017 and 1.1710 is a veteran line that worked in both directions.

I turn from bearish to neutral on EUR/USD

The pair fell into oversold conditions and may stabilize for another week. The flow of disappointing euro-zone data may come to a halt. US data has not been that great recently. All in all, some consolidation is likely after the big falls. 1.1822 may last as a bottom for a longer period of time.

About Author

Yohay Elam – Founder, Writer and Editor
I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me.
Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.
Yohay's Google Profile

Top Brokers

About ForexCrunch

rex Crunch is a site all about the foreign exchange market, which consists of news, opinions, daily and weekly forex analysis, technical analysis, tutorials, basics of the forex market, forex software posts, insights about the forex industry and whatever is related to Forex.

Disclaimer

Foreign exchange (Forex) trading carries a high level of risk and may not be suitable for all investors. The risk grows as the leverage is higher. Investment objectives, risk appetite and the trader's level of experience should be carefully weighed before entering the Forex market. There is always a possibility of losing some or all of your initial investment / deposit, so you should not invest money which you cannot afford to lose. The high risk that is involved with currency trading must be known to you. Please ask for advice from an independent financial advisor before entering this market. Any comments made on Forex Crunch or on other sites that have received permission to republish the content originating on Forex Crunch reflect the opinions of the individual authors and do not necessarily represent the opinions of any of Forex Crunch's authorized authors. Forex Crunch has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: Omissions and errors may occur. Any news, analysis, opinion, price quote or any other information contained on Forex Crunch and permitted re-published content should be taken as general market commentary. This is by no means investment advice. Forex Crunch will not accept liability for any damage, loss, including without limitation to, any profit or loss, which may either arise directly or indirectly from use of such information.